Dhampur Sugar Mills Limited (DHAMPURSUG) Q3 FY23 Earnings Concall Transcript

Dhampur Sugar Mills Limited (NSE:DHAMPURSUG) Q3 FY23 Earnings Concall dated Jan. 31, 2023.

Corporate Participants:

Gaurav Goel — Managing Director

Susheel Mehrotra — Chief Financial Officer

Anant Pande — Chief Executive Officer

Analysts:

Navin B. Agrawal — SKP Securities Ltd. — Analyst

Aman Sonthalia — AK Securities — Analyst

Sanjay Manyal — ICICI Securities — Analyst

Aashav Patel — Molecule Ventures LLP — Analyst

Shailesh Kanani — Centrum Broking — Analyst

Nitin Awasthi — InCred Equities — Analyst

Udit Gupta — — Analyst

Sahil Singh — — Analyst

Presentation:

Operator

Good day, ladies and gentlemen, welcome to the Dhampur Sugar Mills Limited Q3 FY ’23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Navin Agrawal, Head, Institutional Equities at SKP Securities Limited. Thank you, and over to you, sir.

Navin B. Agrawal — SKP Securities Ltd. — Analyst

Good afternoon, ladies and gentlemen. It’s my pleasure to welcome you on behalf of Dhampur Sugar Mills Limited and SKP Securities to this financial results conference call. We have with us Mr. Gaurav Goel, Managing Director, and his colleagues, Mr. Anant Pande, CEO; Mr. Susheel Mehrotra, CFO; Mr. Vineet Gupta, VP, Finance; and Mr. Akshat Kapoor, VP Operations.

We’ll have the opening remarks from Mr. Goel, followed by a Q&A session. Thank you, and over to you, Mr. Goel.

Gaurav Goel — Managing Director

Yeah. Thank you, Navin. Good afternoon, and a very warm welcome to all of you. We’re present at the Dhampur Sugar Mills Q3 FY ’23 earnings conference call.

First of all, let me share the operating numbers of the Company. The Company crushed 12.98 lakh tonnes of cane in this quarter, which was 11.92 lakh tonnes in the corresponding quarter last year, which is an increase of over 9%. The gross recovery in this quarter was 11.34%, which has been marginally better than the corresponding quarter last year, which was 11.22%. Sugar production during the quarter is 1.02 lakh tonnes compared to 1.22 lakh tonnes in the corresponding quarter last year. Sugar sales during the quarter has been 0.73 lakh tonnes versus 0.98 lakh tonnes in the corresponding quarter last year. Average sugar realization in this quarter has been INR35.37 per kg as against INR35.15 per kg in the corresponding quarter last year. The Company diverted 2.41 lakh tonnes of cane for production of ethanol through syrup in this quarter.

The ethanol production during the quarter is 239.96 lakh liters, which was 166.6 lakh liters in the corresponding quarter last year. Out of this 239.96 lakhs, 166.30 lakh liters was produced from syrup and balance from B-Heavy. Production and sales of ethyl acetate has been 85.33 lakh kgs and 85.34 lakh kgs. This is — this was comparable with 70 lakh kgs and 67.47 lakh kgs, respectively, in the corresponding quarter last year. So production was up by about 22% and sales by 26.5%. Production and sales of potable spirits has gained 4.4 lakh cases compared to 3.07 lakh cases last year same quarter. And the sales has been 4.43 lakh cases versus 3.07 lakh cases in the last year.

The Company received the consent to operate for its new distillery plant, which will enhance distillery capacity to 350 KLPD on C heavy molasses. We are still waiting for certain approval, which should be coming — they are expected very shortly, which will enable the commissioning of the plant.

I would now request our CFO, Susheel Mehrotra to take us through the financial performance of the Company. Thank you. Over to you, Susheel.

Susheel Mehrotra — Chief Financial Officer

Thank you. Good afternoon once again, and a very warm welcome to our earnings call for Q3 FY ’23.

Coming to the financial performance of the Company, our Board of Directors approved the financial results for Q3 FY ’23 on 30th January. The income from operations during the quarter ended December ’22 stands at INR643.7 crores and the PBT is INR66.7 crores, cash profit is INR68.7 crores as against the same in the corresponding quarter last year, income from operations was INR630.6 crores, PBT was INR78.4 crores and cash profit was INR77.8 crores. The inventory valuation rate is INR33.60 per kg as against INR32.30 per kg last year. The closing inventory as on 31 December ’22 is 0.71 lakh tonnes as against 1.03 lakh tonnes as on 31 December 2021.

Let me now take you through the business-wise performance. Our revenue from sugar business is INR421.1 crore as against INR439.1 crore in the corresponding quarter last year. Revenue from power business is INR70 crore as against INR63 crore. Revenue from ethanol business is INR158.7 crore versus INR100 crore in the corresponding quarter last year. Revenue from chemical business is INR70 crore versus INR71.8 crore, and revenue from potable spirits is INR109.3 crore versus INR76.7 crore in the corresponding quarter last year. Our profit from sugar business is INR15.7 crore versus INR41.9 crore. From power business is INR34.6 crore versus INR34.9 crores. Ethanol is INR35.9 crore versus INR37.6 crore and from chemical business, it is INR6.4 crore versus INR2.6 crore. From potable spirits, it was marginally negative INR0.8 crore versus INR0.2 crore positive last year.

Coming to consolidated results. The revenue from operations during the quarter stood at INR642.2 crore, EBITDA is INR86.4 crore, PBT is INR67.1 crore and PAT is at INR46.4 crore as against the same in the corresponding quarter last year, revenue from operations was INR630.4 crore, EBITDA was INR100.9 crore, PBT was INR78.8 crore and PAT was INR58.1 crore. The Company has made repayment of long-term loans of INR78.8 crore in Q3 FY ’23, long-term debt as of 31 December 2022 stands at INR234.1 crore. So these are our financial numbers on a broad level.

Thank you once again for joining us on the conference call. We’ll be happy to answer any questions that you may have. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Aman Sonthalia from AK Securities. Please go ahead.

Aman Sonthalia — AK Securities — Analyst

Good evening, sir.

Anant Pande — Chief Executive Officer

Good evening.

Aman Sonthalia — AK Securities — Analyst

[Technical Issues] recently three developments has taken place. Number one, sir, the…

Operator

Aman, sorry to interrupt you. But your voice is breaking. May I request you to come in a better reception area, please?

Aman Sonthalia — AK Securities — Analyst

Now my sound is clear, sir?

Anant Pande — Chief Executive Officer

Yes.

Susheel Mehrotra — Chief Financial Officer

Yes, Aman ji. Yes.

Aman Sonthalia — AK Securities — Analyst

Yeah. Sir, recently three developments has taken place. Number one is that, the — as per the ground report, the production of India made come down below, say, 25. Number two, Brazil has increased ethanol prices. Number three, the ban on pesticide use in the sugar beet in European Union. So how it will impact the sugar prices going forward, sir?

Anant Pande — Chief Executive Officer

Thank you so much, Aman. So as far as your first part goes, India, for surely is lower than what we had expected three months back, but ISMA just had a meeting just a few hours back and 34 billion tonnes is what we expect India to do as on date. I mean, we are still early — I mean, January end, but 34 billion tonnes is the number that ISMA has sort of finalized as of now.

Brazil, you are right, they have increased their prices. Sugar, even EU, I mean, beet, everyway like globally, we are seeing a lot of changes which are happening, which are [Indecipherable] India as of now, because even next year, we do believe that India will again export market. I mean, how much is the…

Aman Sonthalia — AK Securities — Analyst

Sir, will it lead — will we have bull run in the long-term, maybe some midterm bull run in the sugar sector, sir, sugar prices?

Anant Pande — Chief Executive Officer

Are you talking about India alone?

Aman Sonthalia — AK Securities — Analyst

Internationally, sir, globally.

Anant Pande — Chief Executive Officer

See, again, globally for me to answer it becomes very, very tough. In case, any one of our [Indecipherable] has it answer but for surely globally also there seems to be that Q2 and Q3, I don’t see any shortage as of now globally, but in Q4, again, shortages expected as of now for FY ’23-’24. So India will again have a great opportunity to export. But what the prices will like be is anyone’s guess because Brazil can always change vis-a-vis ethanol and sugar. So that is one part that we’ll have to see, their plants will start in about end March, April. So we’ll have to see as to how much of — how much they switch amongst the two. But yes, globally, again for Q4 FY ’23-’24 globally, India will have a great opportunity to again be exporting. Obviously, we’ll have to see what our monsoons and what is the crop, which is expected for FY ’24-’25 to receive [Phonetic].

Aman Sonthalia — AK Securities — Analyst

Yes, sir. And sir, still there is no clarity on the sugarcane price. So when can we expect the sugarcane price for the current season?

Anant Pande — Chief Executive Officer

Aman ji, question that has been asked by us all and I really don’t have any date, but I hope it’s very, very soon. So it can happen actually any day, but I don’t have a specific time that I can say to you that when like it will come. But hopefully in the next week, two weeks, we are expecting it to be out.

Aman Sonthalia — AK Securities — Analyst

Okay, sir. And sir, one more question that the yield and recovery was not very good, not I’m talking about Dhampur but overall, the recovery, and yield was not very good in the plant cane. So, how you foresee — sorry [Indecipherable]. So, how you foresee inland recovery in the plant cane, sir?

Anant Pande — Chief Executive Officer

See, as of now, our plant cane has just about started to come. And we are seeing from our side, and I’m only talking about myself is our plant yields are okay, given the pol in cane seems to be okay. So from our side for our two plants we all seem to be fine. So we should be equal of — we are hoping to be slightly higher than what we were last year.

Aman Sonthalia — AK Securities — Analyst

We are expecting better gross income compared to last year.

Anant Pande — Chief Executive Officer

See, at least the same for sure and higher.

Aman Sonthalia — AK Securities — Analyst

And sir, when we will start this grain-based distillery?

Anant Pande — Chief Executive Officer

So our grain-based is expected to start by end of March.

Aman Sonthalia — AK Securities — Analyst

And the current wind prices whether it is profitable? And if it is profitable, then how much it is profitable, sir?

Anant Pande — Chief Executive Officer

See, again grain prices are fluctuating a lot right now, but yeah, with present grain price, which is at about the last [Speech Overlap]

Gaurav Goel — Managing Director

At grain price — current grain prices of almost about INR20 and the DDGS price, which is a byproduct of around INR25 or so, it is still looking marginally profitable at this point in time. But these prices are fluctuating. So we are keeping a watch on that. And we’ll take a call based on that.

Aman Sonthalia — AK Securities — Analyst

And sir, for the valuation of sugar, sir, how much price we have taken for B-Heavy and these bagasse?

Susheel Mehrotra — Chief Financial Officer

So for bagasse there is a standard price we have taken INR100 and for B-Heavy, we have valued at INR1,100.

Aman Sonthalia — AK Securities — Analyst

Okay, sir. Okay. Thanks a lot, sir.

Anant Pande — Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Sanjay Manyal from ICICI Securities. Please go ahead.

Sanjay Manyal — ICICI Securities — Analyst

Yeah. Hi, sir. Just wanted to understand what is our estimate on the full-year, the crushing number in the sense, if we just take the FY ’23 number? Will it be like 6%, 7% higher than the last year?

Anant Pande — Chief Executive Officer

I don’t think it will be 6% to — we are expecting it to be higher about 2%, 2.5% vis-a-vis…

Sanjay Manyal — ICICI Securities — Analyst

Sir, this must be for the season, I believe?

Anant Pande — Chief Executive Officer

Yes, yes.

Sanjay Manyal — ICICI Securities — Analyst

And if you see in terms of, say, financial year, FY ’23, can — last year, we did somewhere around 35.8 lakh tonnes or 36 lakh tonnes, somewhere around 36 lakh tonnes. So will it be — looking at the current run rate, means, what could be the number for ’23?

Anant Pande — Chief Executive Officer

See, March, for surely will be higher than what it was last year, because we have already, as we always said, that we are about 1 lakh higher than what we did last year. So we are 9% higher than what we did last year crush, so 31 March, yes, for surely, we will do more crush, 35.83 lakh tonnes you are totally right was my last year, so this year should be close to about 37 lakh tonnes.

Sanjay Manyal — ICICI Securities — Analyst

37 lakh tonnes. Okay. And we have done substantial, means out of this — till, I mean, Q3 numbers, what I could see 12.98 lakh tonnes is the cane crushed and out of this 2.41 lakh tonnes is from the syrup. So what could be — so this is roughly more than — this is more than — almost — it is almost like 20% kind of diversion we are doing. So will it be the same number for the full-year, mean, 20% kind of number?

Anant Pande — Chief Executive Officer

It should go up because of the fact that, as we just spoke that our expansion that we have done, that should start in the next about one week. So we are waiting for the final sort of things from exercise [Phonetic], we have got almost everything done. Today, we are on Tuesday, by Friday, we are hoping to get all of the other approvals and then, so this 20% will become higher by March. So we’re expecting it to go up to about 24% to 25% average by March.

Sanjay Manyal — ICICI Securities — Analyst

Okay, okay, okay. And considering that fact, our ethanol number for the full-year should be somewhere around 8.5 crore liters or more?

Anant Pande — Chief Executive Officer

No. It should be more. So 8.5 crore liters is what is as of now. 6.86 crore liters this is up to March. This is up to March last year. You are asking for up till March or you are asking for the…

Sanjay Manyal — ICICI Securities — Analyst

Yeah, please, if we just see for the financial year ’23 and ’24, if you can just guide us, what could be the number?

Anant Pande — Chief Executive Officer

So 6.86 crore liters was we had done till March of ’22. We are hoping to reach about 8 crore liters till about March of — 8 to — I mean, 8.5 crore liters is right.

Sanjay Manyal — ICICI Securities — Analyst

Right, right. And next year after the expansion this number should go to 12.5 crore liters?

Anant Pande — Chief Executive Officer

It should go to about 12 crore liters, yeah. We have to still wait as to whether they change exercise on levy that we have to give for CL. But otherwise 11.5 crore liters, 12 crore liters, 12.5 crore liters is what we will do.

Sanjay Manyal — ICICI Securities — Analyst

Okay, okay, okay. And given the fact that, what my understanding is that, syrup economics still not as good as B-Heavy. Is it prudent to do the higher number of — higher quantity of syrup?

Anant Pande — Chief Executive Officer

Yes. See, again, even though, again, there are various thoughts on this and when you speak to others, we are all slightly parak [Phonetic] on that, what is the sort of margin that you get out of B-Heavy syrup. But from our perspective, we have to also see our own feedstock that now that we have this plant and we are running it, even if we lose INR1 [Foreign Speech] it makes far, far more sense. Even though we don’t believe that there is too much of a parak of B-Heavy and syrup. We believe that the margins are almost the same. But if I don’t choose syrup, I will have no feedstock. So my plant will shut in about nine months. So in order to make sure that I have feedstock to run for the full 12 months I have to use syrup.

Sanjay Manyal — ICICI Securities — Analyst

Sure, sure. So — and one, means you have already mentioned about the recovery you are expecting it marginally better. So last year we did 12.16% on a gross level. And you are expecting maybe a bit better than last year, maybe similar number than last year. Am I correct on that?

Anant Pande — Chief Executive Officer

Yes, yes.

Sanjay Manyal — ICICI Securities — Analyst

And just on the debt front, what could be our debt levels by the end of March this year?

Susheel Mehrotra — Chief Financial Officer

I’ll tell you on the term loan side, we — as we speak are around INR234 crores end of December and INR240 crores as of today. And we will be drawing down the debt for our distillery expansion. So we would be somewhere around INR280 crores, INR270 crores to INR280 crores.

Sanjay Manyal — ICICI Securities — Analyst

Okay, okay. And over and above this, there will be a working capital required?

Susheel Mehrotra — Chief Financial Officer

Yeah. Working capital is all seasonal depending on the stocks we hold. So that will vary.

Sanjay Manyal — ICICI Securities — Analyst

Sure, sure. That’s all from my side. Thank you. Thank you very much for all the answers.

Anant Pande — Chief Executive Officer

Very, very kind of you. Thank you.

Operator

Thank you. Next question is from the line of Aashav Patel from Molecule Ventures. Please go ahead.

Aashav Patel — Molecule Ventures LLP — Analyst

Sir, what would be our current cost of production for the sugar segment?

Susheel Mehrotra — Chief Financial Officer

The current — we have taken the valuation rate at INR33.60 for this quarter.

Aashav Patel — Molecule Ventures LLP — Analyst

Okay. So INR33.60 is our costing?

Susheel Mehrotra — Chief Financial Officer

Yes, that’s right.

Aashav Patel — Molecule Ventures LLP — Analyst

Got it. And sir, what would be current ex mill prices on average?

Anant Pande — Chief Executive Officer

They are about INR34.52 [Foreign Speech].

Aashav Patel — Molecule Ventures LLP — Analyst

Okay, sure. And sir, do you expect MSP prices to be reconsidered this time around at — and hence [Phonetic] the base?

Anant Pande — Chief Executive Officer

I don’t think so, my friend. I mean, you know what, we have been always — we’ve been trying for the MSP price to be — and for the last almost now two, two and half — I mean, but I don’t think it will happen. INR31 is what it stay at as of now.

Aashav Patel — Molecule Ventures LLP — Analyst

Sure. And sir, expected closing inventory for sugar cycle ’23 would be after the production…

Operator

Aashav, sorry to interrupt you. Your voice is coming…

Anant Pande — Chief Executive Officer

So the inventory as of now, that we expect as of 30/09 seeing what numbers that ISMA has done, it should be the same as what it was last year. So around 6.

Aashav Patel — Molecule Ventures LLP — Analyst

Okay, sir. That’s all from my side.

Anant Pande — Chief Executive Officer

[Speech Overlap] is what we expect it to be even as of — it’s all it won’t go up or down, it will be the same.

Aashav Patel — Molecule Ventures LLP — Analyst

Sure, sir. Got it. Thank you.

Operator

Thank you. [Operator Instructions] Next question is from the line of Shailesh Kanani from Centrum Broking. Please go ahead.

Shailesh Kanani — Centrum Broking — Analyst

Thanks a lot for the opportunity, sir. Sir, I had one question with respect to production, which you had said in your opening remarks that that ISMA has reduced the production estimate from more than 36 million tonnes to 34-odd million tonnes. So in light of that information, how do you see domestic prices shaping up, because we had seen increase in SAP prices one and half year back but the domestic prices have not increased in tandem with that SAP prices. So can you share your views on the same?

Anant Pande — Chief Executive Officer

See, I surely believe that the prices will be range-bound. Right now we are about INR34.5. By April, May, you may see the price going up by about INR1. INR35.5 is what I see the price range to be, so INR34 to INR36 is the price range that I see post-March.

Shailesh Kanani — Centrum Broking — Analyst

And this is while [Phonetic] self additions you are saying, right, or refined sugar?

Anant Pande — Chief Executive Officer

No. This is normal sugar.

Shailesh Kanani — Centrum Broking — Analyst

Normal sugar. Okay. And also given the production estimates are lower. What do you think about export quota enhancements from 6 million tonnes to 7 million tons? Is that the possibility now?

Anant Pande — Chief Executive Officer

I don’t think it is. I don’t think it is. I think vis-a-vis INR34, 6 is done. I don’t think that we can expect the government to make it higher, because I think India will need that much of our own stock to be there. So I don’t believe that we’ll get any further export than what we have already got as of now.

Shailesh Kanani — Centrum Broking — Analyst

Fair enough. Sir, again, asking more — talking [Technical Issues] there are rumors — there are talks that SAP might increase. So is it a normal thing because we are already two, two and half months into the season. So do you think — can you assign any probability of SAP prices remaining same or what’s your view, because it is already two and a half months into the season? Can the SAP prices increase now?

Anant Pande — Chief Executive Officer

And against this has been asked, not only by you, by [Technical Issues] people. I have no answer to tell [Phonetic]. But like I do believe that they should stay the same, because there is no reason for SAP price to be higher. The SAP — the cane price that we are doing as of now is very, very good. Farmers are happy, government is happy. So I do believe and I do hope that they stay the same, but again I don’t have a sure shot answer on this.

Shailesh Kanani — Centrum Broking — Analyst

So how long this can be a lingering news that can be going on like is there a timeline or something in that because that keeps on forwarding in the market, right, SAP price would increase? Sorry to bother you on this, but…

Anant Pande — Chief Executive Officer

[Foreign Speech] see, we are all expecting and hoping that it is done fast, but again, I don’t have any answer on this as to when it will be done. It — but I do and the information that we have, that government is seeing it seriously, and it should be done very, very soon.

Shailesh Kanani — Centrum Broking — Analyst

Okay. Okay. Fair enough. Sir, on the grain-based ethanol, sir, can you shed some light on rice husk if we are using that as a feedstock? I guess, we would be using bagasse as a feedstock for our plant, right?

Anant Pande — Chief Executive Officer

No. We will be doing rice and wheat only for our grain-based plant. So, see, for us, when we put up the grain-based plant that for us is an auction that how much of sugar I am sacrificing. So for us the grain-based plant is just Optional as to how much time that we will run the plant, whether we will or we won’t, will be all on what is the price of grain that we get. So that’s why we are in a very sweet spot on that, that we can always [Technical Issues] all of that and still be able to run our plants for full 12 months. So grain for us is just an option that we have. But we will be doing it out of wheat or out of rice and maize.

Shailesh Kanani — Centrum Broking — Analyst

Okay, sir. Sir, last question from my side. Sir, your views on recovery and yields, not only for your Company, but for the industry and for the UP state per se, if you can give a breakup or your views on Eastern, Western, Central UP, how things are shaping up and what can be expected for the season? That will be the last question from my side.

Anant Pande — Chief Executive Officer

See, for us, as I said even earlier that was said earlier that we’ve been thankful to God that ours is okay, I mean, we are better than what we did last time also. We have been hearing stories that in UP, in certain areas both pol in cane and yield are lower, but in our two plants they all seem to be okay.

Shailesh Kanani — Centrum Broking — Analyst

Okay, sir. Thanks a lot, sir. Thanks a lot.

Anant Pande — Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] Next question is from the line of Nitin Awasthi from InCred Equities. Please go ahead.

Nitin Awasthi — InCred Equities — Analyst

Hello, sir. Sir, you mentioned that ex mill price for sugar at INR34.42, was this white sugar or raw sugar?

Anant Pande — Chief Executive Officer

White. So as of now, I was just talking about the present price which is there, as of now is about INR34.5 is the present price of — this is only of white, ex mill price.

Nitin Awasthi — InCred Equities — Analyst

Okay. And raw would be lower?

Anant Pande — Chief Executive Officer

Raw would be lower, but we aren’t doing any raws right now. So we have already sold whatever raw that we had to do. We are not doing any more raws.

Nitin Awasthi — InCred Equities — Analyst

Okay, sir, noted. Understood. Sir, you have been bothered a lot about this question of the SAP not being announced. Unfortunately, I’ll have to ask you one more question, not the same repeated question but a different one, but in the same light. If the announcement of SAP comes through and there is a price increase stated by the state government, will it be applicable retrospectively from the beginning of the season or will it be from whenever the announcement happens?

Anant Pande — Chief Executive Officer

See, if you see history, if SAP is set to be higher, it will be from the start of the crop, that is what we’ve seen as per the past.

Nitin Awasthi — InCred Equities — Analyst

Okay. Noted, sir. And sir, is the molasses policy out for this sugar season?

Anant Pande — Chief Executive Officer

Yeah, yeah. So that is out. So the exercise for policy [Phonetic] is like out. And it is 20% [Phonetic] levy is what we have to give.

Nitin Awasthi — InCred Equities — Analyst

This year?

Anant Pande — Chief Executive Officer

Yes, ’23-’24.

Nitin Awasthi — InCred Equities — Analyst

And last year how was it?

Anant Pande — Chief Executive Officer

20% only.

Nitin Awasthi — InCred Equities — Analyst

So there has been no increase in the amount of molasses you need give to the state government?

Anant Pande — Chief Executive Officer

No. So earlier was 18%, but then in the middle, and in August, they made it to 20%. So they’ve kept the same.

Nitin Awasthi — InCred Equities — Analyst

Okay, okay, understood. So earlier policy was 18%, but mid-year revision was to 20% and now they are sticking to the mid-year revision?

Anant Pande — Chief Executive Officer

Yes. So the 20% was done from earlier also. So it was not 20% only from August. It was whatsoever that we had made. So the same they’ve kept even for ’23-’24.

Nitin Awasthi — InCred Equities — Analyst

Okay. Understood, sir. Sir, given that molasses or any derivative whichever probably sacrifice for the state government that comes [Phonetic] as a precious commodity for the Company. And so, valuable as of now compared to where it was three, four years ago. Is there any formula that is works up to this or is this just be revenue [Foreign Speech]?

Anant Pande — Chief Executive Officer

Great. I mean, again, I think that is, we have already answered what you asked me.

Nitin Awasthi — InCred Equities — Analyst

Okay. Fair enough, sir. Fair enough. Okay. Thank you so much, sir.

Anant Pande — Chief Executive Officer

Okay. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Udit Gupta [Phonetic], Individual Investor. Please go ahead.

Udit Gupta — — Analyst

Hi. Good afternoon, sir.

Anant Pande — Chief Executive Officer

Hi. Very good afternoon.

Udit Gupta — — Analyst

Sir, my question is, sir, what is the processing cost of ethanol per liter, sir, some molasses or juice? And is it any different from grain, sir?

Susheel Mehrotra — Chief Financial Officer

See, the total cost of production from molasses is INR43 and this includes from B-Heavy and from syrup also comes to around INR50. I mean, there is a gap of about INR6 to INR7 between the two between the B-Heavy and syrup.

Anant Pande — Chief Executive Officer

And from grain as of now — see, because we have not started our grain plant as of now. So, grain COP will vary a lot vis-a-vis what is the price of grain at that point of time. So perhaps in — after the Q4, once we start grain, I’ll be able to offer you better or accurate numbers in May.

Udit Gupta — — Analyst

Sir, from FCI rice what I understand, it’s like fixed at INR20 per kg.

Anant Pande — Chief Executive Officer

So, FCI rice yes, they have not fixed it, but they do a tender. But the availability is limited as to how much you can get from them. So, again, so FCI prices also vary a lot.

Udit Gupta — — Analyst

Okay, sir.

Anant Pande — Chief Executive Officer

And the FCI price also varies from state-to-state.

Susheel Mehrotra — Chief Financial Officer

Varies from state-to-state, and also the current FCI price rates, which were around INR20 plus kind of a thing. It is still looking better to buy from the open market as of now. And those are tendered prices. So we don’t know what kind of availability is there at this point of time.

Udit Gupta — — Analyst

Sir, could you tell me the equation, sir, like, if we have 1 kg of FCI rice like 1 tonne, how much of ethanol can you produce from it?

Susheel Mehrotra — Chief Financial Officer

So for producing the — there is about per 100 KL we required 2.3 is the norm for producing one liter of alcohol you require 2.3 liters of grain, 2.3 kgs of grain.

Udit Gupta — — Analyst

Okay. Thank you so much.

Anant Pande — Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Sahil Singh [Phonetic], Individual Investor. Please go ahead.

Sahil Singh — — Analyst

Good evening, sir.

Anant Pande — Chief Executive Officer

Very good evening.

Sahil Singh — — Analyst

Thank you for giving me this opportunity. I would like to ask about the transfer pricing of the B-Heavy diverted [Phonetic] ethanol and [Technical Issues]

Operator

I’m sorry to interrupt you, but your voice is not coming clear.

Sahil Singh — — Analyst

Thank you for giving me this opportunity. I would like to ask about the transfer pricing of the B-Heavy diverted ethanol and the syrup diverted ethanol and COP of syrup and sugar?

Susheel Mehrotra — Chief Financial Officer

Okay. The transfer price for B-Heavy is INR1,100 and for syrup which is INR1,375 that we have taken and the cost of production for B-Heavy-based ethanol is INR43 and syrup is INR50.

Sahil Singh — — Analyst

Thank you.

Anant Pande — Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] As there are no further questions, I will now hand the conference over to the management for closing comments.

Anant Pande — Chief Executive Officer

On behalf of Dhampur Sugar Mills, we would like to once again thank you all for taking your time out for this conference call. If you have any further questions, please feel free to contact us either by phone or by email. You can also visit our website www.dhampursugar.com and post any queries that you have, we will for sure get back to you as soon as possible. Thank you all. Thank you very much.

Gaurav Goel — Managing Director

Thank you all.

Operator

[Operator Closing Remarks]